You can't JailBreak a 3.50 FW PS3 yet, but it's being worked on so keep an eye on the news.
That said, some other brief answers:
1) PS3 Key is OK, but this isn't the place for people to ask for others reviews on chips. For people's feedback see HERE
2) JailBreak is just what hacking a PS3 is referred to while PS3Key is one of many devices that can be used to jailbreak the PS3. A list of common terms is HERE
and PS3 JailBreaking newbie guides are HERE
3) Game compatibility is the same for most JailBreaking devices
including PS3Key, for more information on which games work and don't see HERE